Buffett Pressured to Up Clayton Bid

Billionaire Warren Buffett is known as an astute “value” investor, but some shareholders think his takeover bid for Clayton Homes Inc. is just plain cheap.

Money management firm Brandywine Asset Management said Wednesday that it would vote against Buffett’s $1.7-billion offer for Clayton, joining more than half a dozen investors seeking to block the mobile-home maker’s sale.

Brandywine, which owns about 2.3 million Clayton shares, said the price offered by Buffett’s Berkshire Hathaway Inc. was too low. The firm was Clayton’s 12th-biggest shareholder as of March, with 2.3% of the company.

Shareholders owning about 13% of Clayton have said they will oppose the transaction on concern that Buffett is picking up the Maryville, Tenn.-based company on the cheap amid a slump in mobile-home sales.

Critics of the bid include Los Angeles-based First Pacific Advisors and the California Public Employees’ Retirement System.

Clayton’s stock, which has traded above Buffett’s offer of $12.50 a share since May 30, fell 16 cents to $12.94 on the New York Stock Exchange on Wednesday. The price was as high as $19 in spring 2002.

The Clayton family, which runs the company and owns 28%, supports Buffett’s bid.

Other investors say the company’s outlook has improved since Buffett announced his bid April 1, warranting a higher price. Shareholders will vote at a meeting Wednesday.

Institutional Shareholder Services, the largest U.S. advisor to investment funds, told its clients last week to approve the bid. But Proxy Voting Services, a unit of Institutional Shareholder Services, contradicted its parent Tuesday and urged its clients, which are mainly union pension funds, to vote no.

Berkshire Treasurer Marc Hamburg in Omaha did not return a call for comment.